The formation of a contract is a systematic legal process through which two or more parties create legally enforceable obligations. In business law, especially in matters relating to cooperatives, contracts play a vital role because cooperative societies regularly enter into agreements with members, employees, suppliers and other institutions. Understanding how a contract is formed and what makes it legally valid is therefore essential for the smooth functioning of any cooperative organization. The process of formation of a contract begins with an offer. An offer is a proposal made by one party to another expressing a willingness to do or abstain from doing something with a view to obtaining the assent of the other party. The person making the offer is called the offeror and the person to whom it is made is called the offeree. The offer must be clear, definite and communicated to the other party. Mere intention to make an offer or an invitation to offer, such as advertisements or price lists, does not create any legal obligation. The